Are Family Businesses a Good Environment for Project Management?: Non-Technological Factors Affecting Project and Knowledge Management Practices Within Family Firms

Are Family Businesses a Good Environment for Project Management?: Non-Technological Factors Affecting Project and Knowledge Management Practices Within Family Firms

Filippo Ferrari (Independent Researcher, Italy)
DOI: 10.4018/978-1-5225-9993-7.ch006

Abstract

Relationships between project management, operations management, and organizational strategy are well-known, as well as organizational influences on project. Family businesses work on projects, but their unique nature makes family firms a challenging context for Project Management. This chapter aims to present and discuss the specific dynamics of family business that can impact project management practices. By definition, a project is a complex system, consisting of a set of dozens of interrelated sub-processes. As is known, the percentage of projects that satisfy both technical requirements, budget compliance and which meet the deadlines, is extremely low. This fact forces the researchers to equip themselves with more sophisticated tools to face the complexity of a project, in order to increase its chances of success.
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Introduction

Since family businesses have a high economic impact in most countries (Beckhard & Dyer Jr., 1983; Shanker & Astrachan, 1996; Feltham, Feltham, & Barnett, 2005; Astrachan & Carey Shanker, 2006; Donckels & Fröhlich, 1991; Corbetta & Montemerlo, 1999) such enterprises deserve scholars’ attention not only from the economic and financial but also from the organisational and human resource management point of view. Nevertheless, a systemic understanding of the family firm’s business model and its relationship with performance has not yet been satisfactorily developed in the relevant literature. In particular, issues related to knowledge and project management within family firms are until now not conclusive (Sadkowska, 2017).

Relationships between project management, operations management, and organizational strategy are well known, as well as organizational and environmental influences on project management (PMBOK, 6th Edition, Chapter 2). The technologies and work processes proposed by the organization 4.0 are ineffective if the system of interpersonal relations hinders the free circulation and co-construction of knowledge.

Family businesses work on projects, but their unique nature makes family firms a challenging context for Project Management. For instance, family firms are peculiar regarding enterprise environmental factors as organizational culture, structure, and governance (vision, mission, values, beliefs, cultural norms, leadership style, hierarchy and authority relationships, organizational style, ethics, and code of conduct: Gomez-Mejia, Makri, and Larraza Kintana, 2010; Stewart, Hitt, 2012). Furthermore, they are peculiar about how they treats organizational capability (existing human resources expertise, skills, competencies, and specialized knowledge): They are unique also in managing organizational knowledge (Chirico, 2008; Chirico, Salvato, 2008) and in setting organizational objectives (Berrone et al., 2012; Chua, Chrisman, & Sharma, 1999). Moreover, family owners-entrepreneurs often show peculiar self-centred leadership style, potentially in contrast with project leader’s management action (if the project leader doesn’t belong to the family especially). In addition, family business literature clearly shows family firms are particular in managing relationships with most important stakeholders (Berrone et al., 2012; Oomen, Ooztaso, 2008; Sadkowska, 2017) and in managing procurement processes.

In a nutshell, family firms usually show a lower level of professionalization and managerialization (Stewart, Hitt, 2012) in comparison with non-family ones, and this fact can easily undermine project and knowledge management practices. From this point of view, family businesses represent an entirely unique arena. For instance, regarding the knowledge sharing practices, project team and, more in general, [small] family firms seem to be in a favourable position, due to their (small) size and strong everyday relationships among family members (Bjuggren et al. 2001; Kogut & Zander, 1992), therefore knowledge transfer is favoured in these firms (Sirmon & Hitt, 2003). Moreover, several factors such as commitment, confidence, trust, reputation, and strong sense of identity can play a role in making knowledge sharing easier during business succession between involved generations (Cabrera-Su疵ez et al., 2001; Sirmon & Hitt, 2003; Zahra et al., 2007).

Key Terms in this Chapter

Circumplex Model: The Olson Circumplex Model ( Olson, 2000 ) conceptualises flexibility, cohesion and communication skills as three central variables that define family interactions. Based on a conceptual clustering of many concepts designed to describe family and couple dynamics, the model “is specifically designed for clinical assessment, treatment planning and research on outcome effectiveness of marital and family therapy” ( Olson, 2000 , p. 144).

Dysfunctional Behaviour: The term dysfunctional is defined as “abnormal or impaired functioning” on the part of an individual person, between people in any sort of relationship, or amongst members of a family. Poor functioning refers to both behaviour and relationships that aren't working and have one or more negative, unhealthy aspects to them, such as poor communication or frequent conflict. This is a term used often by mental health professionals for interactions between people and is often used to describe any relationship in which there are significant problems or struggles.

Organizational-Identity: Albert and Whetten (1985) argue that organizational identity is (a) what is taken by employees to be the central attributes of the organization; (b) what makes the organization distinctive and, therefore, unique from other organizations in the eyes of the employees; and (c) what is perceived by employees to be enduring or continuing, regardless of objective changes in the organizational environments. The three characteristics described above suggest that organizations with a strong identity have central attributes, are distinctive from other organizations and remain the same for longer periods.

Socio-Emotional Wealth: Conceptualized in broad terms to capture the stock-of-affect-related-value-that a family derives from its controlling position in a particular firm.

Multilevel Analysis: The fundamental premise of this paradigm comes from the theory of organizational systems and resides in the fact that organizations are complex and dynamic systems with multiple levels. Thus, in any organizational system we find multiple levels such as industry, organization, group, individual etc.; with lower levels nested and integrated within the upper ones.

Family Business: This chapter follows Chua et al. (1999 , p. 25), by defining a family business as: “a business governed and/or managed with the intention to shape and pursue the vision of the business held by a dominant coalition controlled by members of the same family or a small number of families in a manner that is potentially sustainable across generations of the family or families”.

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